Austerity clearly is not working if “not working” means reducing the debt and promoting growth. Instead, in making these governments’ bonds riskier (as seen in the interest rate charged), the policy has indirectly made big European banks that hold lots of them (mainly in Germany, France, and Holland) riskier in the process. This was recognized by global investors when pretty much all private-sector lending to the European banking sector disappeared in the summer and fall of 2011, the response to which has been emergency liquidity provision by the European Central Bank (ECB) in the form of the so-called long-term refinancing operation (LTRO), the ancilliary emergency liquidity assistance program (ELA), and of course, demands for more austerity.

Mark Blyth, Austerity, loc. 31